2014 (10) TMI 814 - AT - Service Tax

Waiver of pre deposit - valuation - Repair and maintenance service - inclusion of value of spares/parts required for repair and maintenance - Held that - value of spares and materials used was mentioned in the main part as a summary and there was an annexure to invoice showing details of spares and materials used and sold for the purpose of providing service. Therefore, we found on going through the records and invoice produced that the appellant have followed the provisions of Notification No. 12/2003 and it is not only the fact that they had paid tax as per West Bengal State Govt. VAT Act and on deemed sale portion, they have also clearly shown the details of spares/parts used and sold during the course of repair and maintenance. Therefore, appellants have made out prima facie case for complete waiver and stay against recovery. Accordingly, the requirement of pre-deposit is waived and stay against recovery is granted during pendency of the appeal - Stay granted.

Summary

Issues:
1. Liability to pay Service Tax on spares/parts for repair and maintenance.
2. Eligibility for exemption under Notification No. 12/2003-S.T.

Analysis:
1. The dispute revolved around the liability of the appellants to pay Service Tax on spares/parts necessary for repair and maintenance services. An amount of Rs. 2,38,57,706/- was demanded as Service Tax, education cess, and penalties. The appellants contested the imposition of tax, cess, interest, and penalties.

2. The appellant argued that they were eligible for exemption under Notification No. 12/2003-S.T., which exempted the value of goods and materials sold by the service provider to the recipient, provided documentary proof of the value of goods and materials was available. The appellant cited a previous Tribunal decision and a subsequent Supreme Court dismissal of an appeal against it to support their case for exemption.

3. The respondent, however, relied on a different Tribunal decision that emphasized the inclusion of 'deemed sale' goods in the tax liability. Reference was made to a High Court judgment stating that specific exemption conditions must be met to avail the exemption. The respondent argued that the appellant did not fulfill these conditions and hence was not eligible for exemption.

4. The Tribunal analyzed the arguments presented by both sides and noted that the High Court's decision was a general rule, whereas the previous Tribunal decision considered the specific facts of the case, which were upheld by the Supreme Court. The Tribunal observed that the appellant had clearly detailed the spares and materials used and sold for providing services, as required by Notification No. 12/2003. The appellant had also paid tax under the West Bengal State Govt. VAT Act and demonstrated the details of spares/parts used and sold during repair and maintenance.

5. Based on the evidence presented, the Tribunal found that the appellants had made a prima facie case for a complete waiver and stay against recovery. Consequently, the requirement of pre-deposit was waived, and a stay against recovery was granted during the pendency of the appeal. The operative portion of the order was pronounced in open court, providing relief to the appellants in the matter of Service Tax liability on spares/parts for repair and maintenance.